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JD Sports Fashion shares rose on Thursday after the athleisure giant reported accelerating sales during the second quarter.
At 133p per share, the FTSE 100 company was last dealing 3.8% higher.
JD’s like-for-like sales rose 2.4% during the three months to July, while revenues on an organic basis increased 8.3%.
Like-for-like sales had fallen 0.7% in the prior quarter, while organic turnover had increased by a more modest 4.9%.
JD said that “the quarter-on-quarter trading improvement was driven primarily by the strength of our multi-brand operating model and softer comparatives with the previous year.”
Last quarter’s pickup meant like-for-like and organic revenues were up 0.7% and 6.4% respectively during the first half.
North America Impresses
Performance remained strongest at JD’s North America division, where like-for-like sales growth accelerated to 5.7% in the last quarter from 2% in quarter one. Organic sales in its largest territory were up 13.7% year on year.
In the UK, like-for-like sales dropped 0.8% in quarter two, though this was better than the 6.4% decline reported in the prior three months. Organic sales also flipped from a 5.8% drop in quarter one to a 1.2% rise during the second quarter.
Gross margins reversed 30 basis points between April and July, to 48.4%. This meant margins for the first half came in at 48.3%, down 10 basis points.
JD said that last quarter’s drop “was seen mainly in apparel and online, where its higher penetration resulted in the UK being most impacted.”
The retailer finished the first half with 4,506 stores in its portfolio, up 1,189 from the start of the fiscal year. This comprised of 85 new JD-branded outlets, and 1,179 acquired stores following its takeover of Hibbett last month for around $1.1 billion, net the disposal of non-core stores.
JD said that the purchase “adds material scale and presence in the US… strengthening further our brand relationships in the world’s largest sportswear market.”
Guidance Maintained
Chief executive Regis Schulz said that the second-quarter sales improvement reflects “the strength and agility of our multi-brand model.” He added that double-digit organic sales growth in its North American and European markets was “supported by the continued success of our JD store rollout programme.”
Looking ahead, JD said that “the global macro environment remains volatile and so we continue to be cautious on our outlook for the rest of the year.”
However, the retailer kept its adjusted pre-tax profit forecasts constant at between £955 million and £1.035 billion.
“Solid” Numbers
Panmure Liberum analyst Anubhav Malhotra described JD’s first-half trading was “a solid result in the current consumer environment.”
He said that the Footsie firm “is faced with a tough consumer demand environment [and] particularly for apparel at a time when it is correcting past underinvestment in operations and systems, expanding rapidly and integrating acquisitions.”
Malhotra added that JD’s sales in North America represented “a solid outturn in the context of the US consumer cutting back on discretionary spending and being more focused on value for money options.”
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Publish date : 2024-08-21 21:45:00
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